Pension benefits can be attached for maintenance

If you are not being paid maintenance to support your child, you can consider having the defaulting parent’s pension benefits attached to cover the arrear payments – and possibly even future maintenance payments.

The attachment of pension benefits is a very effective tool, given the large number of maintenance defaulters, Muthundinne Sigwadi, associate professor of law and head of the mercantile law department at the University of South Africa, told the annual conference of the Pension Lawyers Association.

Attaching retirement fund benefits helps children and spouses who are usually faced with the daunting task of ensuring that the defaulting parent complies with his or her maintenance obligations, he says.

The Maintenance Act and the Pension Funds Act give a retirement fund the right to withhold or deduct amounts from pension benefits to pay maintenance to a child, and this grants applicants a mechanism to enforce a maintenance order, Sigwadi says.

In terms of the Pension Funds Act, retirement savings can be attached or ceded only for limited purposes, including to pay outstanding tax or maintenance.

A parent, typically a mother or caregiver, seeking regular payments to support a child needs to obtain a maintenance order against the other parent, typically the father, from a maintenance court. The court will consider the needs of the child and the parent’s ability to contribute.

If the parent fails to adhere to the order and pay the maintenance on the due date, he or she has 10 days to rectify this. If the maintenance is still not paid, the caregiver or the other parent can go back to court and ask for the maintenance order to be enforced.

To enforce the order, the court can order that the defaulting parent’s property is attached or issue an order to his or her employer to deduct the maintenance directly from the defaulting parent’s salary.

Some defaulting parents try to hide their assets or resign from their jobs to avoid paying maintenance – and this is when you may need to get what is due to support a child from the defaulting parent’s retirement fund.

If a fund is making ongoing payments to a pensioner, you can seek a court order directing the fund to deduct what is due for maintenance and to pay it over, Sigwadi says.

If a maintenance defaulter is still an active member of a fund, the fund cannot make any deductions for outstanding maintenance payments until the member’s benefit in the fund accrues, he says. This will occur when the member retires, resigns or is retrenched, in which case the fund will pay out a retirement or withdrawal benefit.

If a parent has a history of defaulting on his or her maintenance payments, you may be able to have his or her retirement fund benefits attached to cover future maintenance payments.

The law is not clear when it comes to attaching retirement fund benefits to cover the future maintenance of a child, Sigwadi says. However, a few cases have established that the courts will entertain orders to attach fund benefits for the future maintenance of a child.

In 2003, a woman approached the Durban High Court (Mngadi v Beacon Sweets and Chocolates Provident Fund) seeking the enforcement of a maintenance order for her two children. The father was a member of the Beacon Sweets and Chocolates Provident Fund. He had resigned to avoid paying maintenance and planned to withdraw his benefit, the court heard.

The court ruled the fund could be interdicted from paying the benefit to the member for as long as the member was liable for maintenance, and it ordered the fund to deduct from the benefit the maintenance due each month.

The court said that once the maintenance was no longer due – for example, when the children reached the age of majority – the member could be paid the remaining benefit.

In a 2004 Cape High Court case (Magewu v Zozo), a member of the Telkom Retirement Fund was retrenched. Although the member was not in arrears with his maintenance payments at the time he was retrenched, the mother of his child had previously had to obtain an emolument order against his salary to force him to pay maintenance.

The court granted an order instructing the fund to withhold the retirement fund benefit and directing it to pay the maintenance monthly.

In 2008, the Pension Funds Act was amended, allowing retirement funds to reduce or settle debts relating to the limited circumstances in which deductions can be made from funds.

In The Pension Funds Act: A Commentary, Rosemary Hunter et al interpret this to mean the fund can reduce or settle debts for maintenance, including future debts for maintenance.

What you need to lodge a claim

Before you can apply to have a retirement fund member’s benefits attached to pay outstanding maintenance, you must be in possession of a valid maintenance order. Then you will have to approach a competent court.

The fund and the defaulting member should be identified to facilitate easy payment, Muthundinne Sigwadi, associate professor of law and head of mercantile law at the University of South Africa, says.

Maintenance orders presented to retirement funds often do not cite the fund correctly, and most funds take the view that the fund must be cited before it will pay out, he says.

If a fund is presented with a maintenance order that does not cite the fund and the amount outstanding, the fund has no way of knowing what maintenance payments have been made and what is outstanding.

To obtain the order attaching the retirement fund benefits, you will have to show that the member has a history of failing to take his or her maintenance obligations seriously, Sigwadi says.

A major obstacle to the attachment of pension benefits is that many funds are presented with a maintenance order too late to give effect to it because the member has already left the fund, he says.

Once the retirement benefit has been paid to the member, the benefit is no longer in the hands of the pension fund and it cannot attach the benefit.

You will then have to pursue an action against the defaulting member and his or her bank, Sigwadi says.

Sigwadi says an argument can also be made for a fund to withhold a member’s benefit pending the finalisation of a claim for arrear maintenance.

A Supreme Court of Appeal case confirmed that a fund can withhold a member’s benefit pending the finalisation of a claim for damages allegedly suffered by the member’s employer, as in the case of theft. This ruling could be used to argue that a fund may withhold a benefit pending the finalisation of a maintenance claim, he says.

Therefore, if you know that a defaulting parent is, for example, going to leave his fund, you should ask the fund to withhold his or her benefit while you finalise a claim for arrear maintenance.

Sigwadi says the Maintenance Act is silent on the subject of a retirement fund’s duty to inform a defaulting member before it pays a maintenance claim. But this does not mean the benefits should be attached without the fund notifying the member. If the fund did so, it would infringe the common law principle of allowing the other side to be heard, Sigwadi says.

In a 2006 case (Louw v Louw), the High Court set aside an order where a magistrate’s court had ordered the attachment of a member’s pension benefit for arrear maintenance without prior notice to the member.

Before paying out a maintenance claim, a fund must deduct the outstanding balance on any home loans that it granted in terms of the Pension Funds Act. The amount for the maintenance order must be deducted before any awards in a divorce order are deducted, Sigwadi says.


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